1) In the medium term, financial management moves to where the capital is, not vice versa. It’s nice to imagine that globalisation “makes it all different” but there’s very little evidence for that. If more and more of the value chain is sited in East Asia (or wherever), more and more of the finance industry will move there too.

(Economists don’t see this as a problem, but that’s because they don’t actually believe in national economies… whether or not you have that luxury depends on the job that you hold…)

2) The latest financial crisis, just like many before, highlights Minsky’s notion, encapuslated by Thabo Mophiring above that there’s a limit to the percentage of an economy that can be occupied by the finance sector before said economy becomes inherently unstable… It’s probably going to take the next big crisis before people get wise to this, but just because it takes people time to catch on to reality doesn’t mean one shouldn’t think about the implications. In a darkly comic kind of way, this is one of the ways (1) actually occurs. Alternative finance centres get their start from local capital right after the “masters of the universe” have imploded for the nth time…

]]>By: Thabo Mophiringhttps://orgtheory.wordpress.com/2009/12/24/b-schools-dont-make-managers-anymore/#comment-85129
Thu, 24 Dec 2009 11:18:05 +0000http://orgtheory.wordpress.com/?p=9423#comment-85129Finance has a limit ito size of economy it can take up. It is also not a high employer.
Unless the USA rebalances, it’s econmy will remain sickly.

In this new economy, the cost of networking action has fallen greatly, whereas the cost of developing a solid abstract representation has remained the same or increased, in many instances.

One sees this in the pharma field especially, where double blind studies are avoided and self-funded “investigations” are the norm. Firms won’t let genetically modified seeds be tested independently, and so on.

]]>By: Thorfinnhttps://orgtheory.wordpress.com/2009/12/24/b-schools-dont-make-managers-anymore/#comment-85123
Thu, 24 Dec 2009 04:02:52 +0000http://orgtheory.wordpress.com/?p=9423#comment-85123The long run trend is towards more abstract representations of value. Aside from the gut reactions that finance is “icky”, it’s not obvious that this is bad–though they do seem to do a better job of extracting rents than creating value.

The manufacturing workforce has collapsed as manufacturing output has exploded. Managers are needed less, and their skills can’t be taught in a classroom. China, Brazil, etc. are all also slashing manufacturing jobs.

These corporate stereotypes are also out of date. GM and Ford actually have good cars now. Toyota is dealing with various troubles–among them, a shift in the price of the yen which slashed profits, for which they were unhedged. They haven’t done the M&A of VW or the financing options of GM. They could use a few more finance/design types in upper management.